WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Most Asian bourses closed in the red on Tuesday amid lingering worries over the growth prospects of the Chinese economy. Continuing weakness in oil prices also had an impact. On the flipside, the majority of European equity shares advanced in early trade on higher retail stocks following a four-session declining streak. In FX markets, the renewed drop in oil prices to fresh multi-year lows drove oil related currencies lower. Elsewhere, the US dollar retained a firm tone against its major currency peers. The data calendar is relatively light today, though Fed’s Stanley Fischer’s and Jeffrey Lacker’s speeches will be worth watching. Adding to this, speeches by the ECB’s Peter Praet and Sabine Lautenschläger will probably be scrutinized by market participants.
GREECE: Speaking in a press conference after a meeting with his Greek counterpart, Finnish Finance Minister Alexander Stubb expressed his satisfaction with the progress made so far by the Greek side in the implementation of the agreed reforms agenda suggesting that Greece is moving “in the right direction”. According to some press reports, besides the planned overhaul of the social security and pension system, the size of any projected fiscal gap in the period 2016-2018 is also expected to dominate official discussions in the context of the 1st programme review. The mission heads are reportedly expected to arrive in Athens by January 25th to hold discussions with the government in the context of the review with an intention for it to be completed by end-February.
SOUTH EASTERN EUROPE
BULGARIA: The trade deficit continued shrinking in the first eleven months of the year, amounting to BGN 5, 454mn, down by 21%YoY.
ROMANIA: Romania’s FinMin sold at an auction on Monday RON 352mn (~€77.69mn) of December 2022 T-bonds, more than RON 300mn (~€66.21mn) initially planned. The average accepted yield came in at 3.06%, nearly 20bps lower compared to that achieved at a prior similar tender in December. Separately, according to the latest INSEE data, the trade of goods deficit widened to €783mn in November, up by 78.4%YoY bringing the cumulative deterioration at 35.5%YoY in January-November.
CESEE MARKETS: The majority of emerging stock markets retained a negative tone earlier on Tuesday amid China-related jitters and an ongoing decline in oil prices so far this year. Against this backdrop, most regional currenciesremained under pressure and local-currency denominated government bonds broadly retreated in early European trade. In the external sovereign debt markets, Poland tapped yesterday international markets selling €1bn in 10Y and €750mn in 20Y Eurobonds priced respectively at 65bps and 100bps above mid-swaps. CESEE focus today in on Serbia’s MPC meeting and December HICP. Parliamentary hearings of MPC candidates later on the day in Poland also lure market attention.
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